Diesel Prices Drop More Than 4 Cents Overnight

August trading started with a thud as diesel prices dropped more than 4 cents overnight, leading the energy complex lower. Those gains have shrunk in the past hour with crude oil futures ticking back into positive territory and product prices ticking up nearly 2 cents off their overnight lows.

Energy futures remain stuck in a wide sideways trading range as it appears many traders are either soaking up the last days of their summer vacations, while others are struggling to digest the impacts of the latest flurry of tariff announcements that may or may not ever happen.

The July payroll report showed headwinds in the U.S. labor market as the current month estimate had only 73,000 jobs believed to be added, while the June and May readings were lowered by a huge 258,000 which nearly wiped out all of the gains previously estimated for both months. The headline unemployment rate ticked 1 tenth higher to 4.2% for the month while the less manipulated U-6 rate ticked up 2 tenths to 7.9%.

Chevron highlighted its record oil production in Q2, while also noting how the lower price environment put downward pressure on earnings and justified the company’s layoffs. The Q2 report also highlighted the expansion of the company’s Geismar LA renewable diesel capacity, although it’s likely that facility is not running at full rates like many other RD producers who have slowed runs to minimize losses in the current environment.

Exxon reported its second highest quarterly production in Q2, and like most others reported better refining margins but lower production margins as oil prices dropped. Exxon also highlighted the startup of its Canadian Renewable Diesel facility with 20mb/day of capacity, and the startup of its new diesel hydrofiner unit in the UK with 37mb/day of capacity.

HF Sinclair highlighted improving margins in both of its refining regions during the quarter, and showed renewable diesel margins that were less negative than in previous quarters. See tables below.

PBF highlighted positive earnings from operations (with just a slight $5 million net loss) for the quarter as refining margins on the eastern 2/3s of the country moved into positive territory, while West Coast operations remained deep in the red. The company is on track to restart full operations at its fire-damaged Martinez refinery by the end of the year, with insurance covering most of the costs of repairs, to the tune of $280 million during the second quarter alone.

Valero reported a 2nd upset in as many days at its Corpus Christi West refinery, this time a hydro treating unit appears to have been taking offline due to a sudden loss of containment. No word yet on how long that unit may be offline.